AUDGBP
The AUDUSD pair held steady even after the RBA released the minutes of its August meeting. The pair is up by about 0.12% as at 05:02 GMT and is trading at 0.7225, which is higher than the yesterday’s low of 0.7165. The pair is in its third consecutive day of gains.
In its minutes for the August meeting, the bank explained its thought process for the decision it made. In this meeting, it decided to leave interest rates and the target for the three-year government treasuries at about 0.25%. It also left the term funding facilities intact in its bid to continue to support the economy.
The bank expects that the economy will contract by about 6% this year and the unemployment rate will jump to 10%. The rate was at about 5% before the crisis. Also, it expects that inflation will remain below its 2% target in the next few years.
Still, the RBA is in a difficult situation. As an export-oriented economy, it wants to keep supporting the country’s exporters. One way to achieve this is to ensure that the Australian dollar is relatively weaker than the US dollar by implementing negative rates. In its statement today, the bank did not mention anything about these rates, but Governor Lowe said that the bank was ready to continue intervening.
The weekly chart below shows that the AUDUSD pair has been in the green for the past nine consecutive weeks. The price has moved above the 61.8% Fibonacci retracement level. This retracement connects the highest point in 2018 with the lowest level this year. Also, it is above the 50-week and 100-week exponential moving averages.
Therefore, I suspect that the upward trend will continue as bulls aim for the 78.2% Fibonacci retracement level at 0.7570. On the flip side, a move below the psychological level of 0.7000 will invalidate this trend.